Friday, May 29, 2015

Risk Update: The Insurance Insights Edition (Malpractice & Cyber)

Two updates on the subject of insurance. First, likely a moot point already addressed by our compliant readership, but still interesting, from Thompson Hine: "Do you know your rule on malpractice insurance disclosure?" --
  • "Only one jurisdiction in the nation — Oregon — requires lawyers to carry legal malpractice insurance.  But all the other states have varying requirements about malpractice insurance and disclosing whether or not you carry it.  Knowing the rule in your jurisdiction is vital to staying out of ethics trouble."
  • The ABA’s comprehensive state-by-state chart.
  • "Ohio, for instance, is one of only seven jurisdictions that require lawyers (with certain exceptions) to inform a client directly if they do not carry a certain level of malpractice insurance.  And Ohio lawyers who fail to communicate that fact to their clients have been reprimanded, and even suspended (at least when the failure to disclose is coupled with other misconduct).  The other states with disclose-to-clients requirements are Alaska, California, New Hampshire, New Mexico, Pennsylvania and South Dakota."
See the full article for discussion on whether disclosure requirements are a good thing or not. And see BNA's update on: "Think You Don’t Need Cyber Insurance? Think Again!" --
  • "Big Law is a big target for cyber thieves, experts warn. For starters, law firms are viewed by criminals as low-hanging fruit — because firms are perceived as having “relatively lax security as compared with their sophisticated corporate clients,” said Roberta Anderson, a partner at K&L Gates,  and co-founder of the firm’s Cyber Law and Cybersecurity practice group."
  • "Negligent acts, as well as internal and external hacktivists, are also typically covered — 'for example, an attorney mistakenly emailing a non-encrypted file full of Health Insurance Portability and Accountability Act [HIPAA] information to a third party, and for an external event through a phishing attack and/or a rogue employee event,' said New York-based Joe DePaul, senior vice president, Finex North America Cyber and E&O team, Willis Americas Administration Inc."
  • "'Thinking that cyber insurance policies are all the same and will automatically respond to any cyber event, regardless of the cause,' said Selby. 'The devil is in the details, and law firms should carefully consider their unique cyber risk profile and ensure that their cyber coverage provides adequate protection against those risks,' she said. Working with an experienced cyber broker, and possibly coverage counsel, is highly recommended.'"
See the full article for discussion on recommendations for what cyber insurance should cover. And see our previous post from Paragon on reputation coverage specifically.

Thursday, May 28, 2015

Shepherd and Wedderburn Invests in Matter Intake, Compliance & Lawyer Visibility

Shepherd and Wedderburn, a leading UK law firm with offices in Edinburgh, Glasgow, Aberdeen and the City of London, has selected Intapp Open and Intapp Flow to increase visibility across firm-wide software systems and business processes.
Shepherd and Wedderburn will be using Intapp Open to modernise its matter intake system, enabling the risk team to monitor compliance more effectively and reducing administrative burdens on lawyers and support staff. In addition, Shepherd and Wedderburn is implementing Intapp Flow to automate business processes such as matter closing, to enhance business efficiency.
Said the Firm's IT Director, Paddy Toner:
  • "Given the increased focus on risk and compliance across the legal industry, we wanted a single application that could give us visibility into the entire matter intake process, and standardise how we manage other workflows. Intapp Open and Intapp Flow provide us with a modern, industry-standard approach to monitor, report and analyse business processes throughout the firm."
    "Intapp Open also offers our lawyers better visibility into the status of new matter requests."

Aurora North Software, a certified full-service Intapp partner, is leading the implementation with Shepherd and Wedderburn and conducting a series of training sessions.

Shepherd and Wedderburn's decision follows its successful implementation of Intapp Wall Builder, which the firm uses to manage security of sensitive client data. The firm implemented Wall Builder last year to replace ad hoc, manually intensive approaches with a single interface that enables organisations to centrally control, monitor and report on the entire confidentiality lifecycle.

Said the Firm's Application Manager,  Steve Dalgleish:
  • "We've been impressed with how effective Intapp Wall Builder has been in simplifying how we manage and protect client data – increasing information security without involving IT at every step. We look forward to applying the Intapp approach to our matter intake process and other workflows, which will improve visibility, standardise processes, and increase business efficiency."

Visit for more information on Intapp Open new business intake and conflicts management software, or to request a demonstration.

Wednesday, May 27, 2015

New York Event: CNA Large Law Risk Management Forum

Our colleagues at CNA write in with an invitation to attend their upcoming large law risk management forum, designed for firm management and senior risk professionals:
  • "We are pleased to invite you to a complimentary seminar focusing on law firm risk management. The seminar will feature multiple panels addressing today’s emerging law firm risks from various perspectives:
    • Trends in lawyers professional liability claims
    • Business continuity/business interruption planning
    • Information risk trends
    • Cyber event response
  • "CNA is the leading professional liability insurer of law firms in the United States, with more than 50 years of experience in providing insurance solutions and risk management services to law firms and attorneys."
The session is set for Wednesday, June 17, 2015 (1pm - 5pm) and features law firm speakers from Hunton & Williams, Fried Frank, Harris Beach, Baker Hostetler. For additional information and to RSVP, please see CNA's official invitation.

Monday, May 25, 2015

"Preposterous" Conflicts (Potentially Important Precedents)

Significant ink spilled in recent days on a conflict accusation facing Kirkland and Ellis. First, Kirkland responds to Mylan's disqualification attempt: "Kirkland Blasts 'Preposterous' Mylan Conflicts Claims Ahead of Hearing" --
  • "Kirkland & Ellis came out swinging this week against a lawsuit alleging that it ignored a conflict of interest by advising Teva Pharmaceutical Industries Ltd. in Teva's ongoing $42 billion bid for rival drugmaker Mylan N.V."
  • "Mylan's May 7 preliminary injunction motion, the firm says, is 'an unwarranted attack on the integrity and reputation of real people at Kirkland.'"
  • "In a statement earlier this month, Kirkland insisted that Mylan signed a conflicts waiver that covers the firm's representation of Teva. Monday's brief fills in the details, describing several cases in which Kirkland represented Teva and other companies that were adverse to Mylan without triggering any suggestion of a conflict."
But what's most interesting is the commentary on the pages of the Wall Street Journal: "Dealpolitik: Why Lawyers Need to Care About the Mylan-Kirkland Battle" --
  • "But sometimes it gets complicated, particularly in the corporate world where lawyers have many clients which in turn have many interests.  Big firms try to manage the issue by asking sophisticated clients to give their consent to some conflicts."
  • "Kirkland represents subsidiaries of Mylan, apparently in connection with some intellectual property litigation.  (Much of the court filings are filed under seal or redacted so the details of some of the dispute remain confidential.)  How can it then represent Teva in an attempted takeover of Mylan?  This where a law firm’s conflict management comes in.  Adverse representations can be permitted if the client has given informed consent."
  • "Mylan acknowledged in a court filing it gave consent to Kirkland in its engagement letter for certain adverse representations.  The consent is limited to matters which “are not related to the legal services that” Kirkland provides to Mylan.  In my own experience, this kind of generic waiver is commonplace at large firms, particularly those that have a significant takeover practice."
  • "Mylan’s position has far-reaching implications for takeover law firms.  Almost any representation of a corporate client involves its commercial and other strategies.  If the federal court throws Kirkland out of the deal, the decision could create doubt as to whether any law firm could work on a takeover fight where a client, or even a former client, is on the other side.  That outcome could be jarring to a number of large firms that have hundreds of clients but also have a thriving M&A practice."

Wednesday, May 20, 2015

Book Review: Conflicts of Interest in the Practice of Law: Causes and Cures

Intapp principal consultant and legal industry veteran Alexa Kokinos writes in with her review of Richard E. Flamm's latest: "Conflicts of Interest in the Practice of Law: Causes and Cures" [direct link to complete review] [publisher's web site] --
  • "In Conflicts, Flamm surveys the development of conflicts of interest in the United States as a history where simple principles confront the complexity of facts, circumstances and interpretation."
  • "Conflicts offers a comprehensive, extensively researched examination of ten different aspects of conflicts rules and law, ranging from 'Concurrent Conflicts of Interest' to 'Conflicts Involving Former Clients,' 'Attorney-Client Relationships,' and 'Consent.'"
  • "Model Rule 1.9 on conflicts involving former clients, for example, states that a lawyer shall not 'knowingly represent a person in the same or substantially related matter.'"
  • "Flamm devotes two chapters overviewing how federal and state courts interpret 'substantially' and 'related' differently. When considering whether a conflict arises with prospective clients, a party alleging a conflict claim is expected to show that counsel went beyond 'initial and peripheral contacts' by acquiring confidential information that could be 'significantly harmful' to the prospective client."

Tuesday, May 19, 2015

Time On Your Side? (Sometimes, Sometimes Not) – Conflicts, Disqualifications & Billing Records

Several interesting updates to share. First up: "Tensegrity DQ'ed in Suit Against Former Weil Client" --
  • "It's been nearly 10 years since Matthew Powers and Steven Cherensky handled patent and trade secret cases for Micron Technology Inc. while working at Weil, Gotshal & Manges. But on Friday they were disqualified from a case against Micron and their former law firm over the same NAND flash technology. Despite the passage of time and updates to NAND, U.S. District Judge Richard Andrews ruled there was still too much risk that Micron's confidences could be used against the company."
  • "'In addition, the fact that Messrs. Powers and Cherensky might be required to depose and cross examine the very same witnesses they previously represented creates the appearance of switching sides,' Andrews wrote in Innovative Memory Solutions v. Micron Technology."
  • "It's the second time Powers has been disqualified from a case against a former client since leaving Weil Gotshal in 2011 to launch Tensegrity Law Group, a plaintiff-side intellectual property firm. Powers represented numerous big technology companies during his 18 years at Weil, so steering clear of conflicts at Tensegrity has posed some challenges."
  • "Powers and Chernesky billed 4,000 hours on patent and trade secret cases for Micron and Lexar, a company Micron acquired in 2006, according to Andrews' opinion. Micron intends to argue that the Innovative Memory patents can be traced to confidential trade secrets that leaked from Lexar, so that previous representation is directly at issue, Micron argues."
Next: "Sydney law firm ruled to be in conflict" --
  • "A Nova Scotia Supreme Court justice has ruled a Sydney law firm made a mistake in accepting a retainer from a client involved in a land dispute with another client represented by the firm. In a decision released Wednesday, Justice Frank Edwards granted the application by Jacqueline Lappin that the firm of Sampson McDougall was in a conflict and should not represent another client with whom Lappin was embroiled in a land dispute."
  • "In September, construction began and Lappin contacted senior and founding partner of the firm, Robert Sampson, who advised she had a good case for establishing an easement and that he would speak to the previous owner of the property. Further, Sampson said he would write to Bauer demanding he halt the construction of the fence."
  • "In a conversation with a firm representative later in the month, Lappin was advised the firm was in a conflict and would not be able to represent her."
  • "There is no evidence that, prior to accepting the respondent's (Bauer) retainer, Sampson McDougall conducted a conflict check and satisfied itself that it was not in possession of confidential information from the applicant (Lappin)," Edwards wrote, adding that from the outset he would disqualify Sampson McDougall on the basis of having represented Lappin in 2010...He said the evidence of Lappin was clear in that she considered herself to be an ongoing client of the firm, and that contact with firm members was in accordance with that belief."
Finally: "Billing Records Are Confidential Even if They Contain No Legal Advice" --
  • "Billing statements are 'confidential communications' within the meaning of California's attorney-client privilege statute and thus categorically exempt from disclosure under the state's public records law, the California Court of Appeal, Second District, held April 13."
  • "The ruling—which answers a question of first impression that has divided courts around the country—denied a petition that the ACLU of Southern California filed after Los Angeles County officials rejected an open records request for the billing invoices of law firms to which the county paid nearly $40 million in a single year to defend it against a spate of police brutality lawsuits."
  • "Writing for the court, Justice Richard D. Aldrich said the county validly invoked a statutory exemption that applies to records containing confidential communications protected by the attorney-client privilege."
  • "The court said there was no controlling case law on “whether billing statements qualify as privileged communications” under Cal. Evid. Code §952, which codifies the attorney-client privilege."

Monday, May 11, 2015

In Conversation: The Business Case for Investing in Business Acceptance (or How to Succeed in Business Intake with a Bit of Trying)

Here's another interview piece: "Intapp In Conversation – Business Acceptance: The Case for Investment" -- James Perkin, COO at Procopio sits down with Pat Archbold, head of Intapp's risk practice group. Jim discusses the drivers behind his firm's decision to invest in enhancing intake and conflicts management.

Topics include:
  • Efficiency drivers
  • The lawyer experience
  • Supporting AFAs and pricing initiatives
  • Product evaluation considerations
  • Benefits of a best-of-breed solution vs. bundled practice management tools


  • Pat:
    • "Good point about looking at the overall picture. I think in many case intake projects have been led by people in the risk. The historical question is 'Can we take this on?' and maybe not 'Should we take it on?'"
    • "Traditional workflow tools focus on routing a form from Point A to Point B, but they don't really leverage that underlying data both from an efficiency perspective, and to support the strategic use of information, like for pricing."
  • Jim:
    • "I think all firms are looking for the holy grail of a system that pulls everything together and works together seamlessly. Our philosophy is to get the best in breed in each area. That can be accounting, that could be conflicts, client intake, etcetera. That's been our approach."
    • "We looked at best in breed and the way Intapp integrates intake and conflicts. And we made the decision that we would have both modules under one roof, as opposed to two separate entities. So we’re now moving conflicts from Elite into Intapp over the next six to eight months."
    • "As far as in what we're using and from a financial point of view, I think we've got to have our intake smarter. We actually look at accounts receivable now."
    • "We selected Intapp Open because we want to do this more efficiently while also have a lot more direct control over the software versus a system like Metastorm."
    • "We want to get ahead of the game by knowing how we can price based on history through the database because we all understand a lot of the clients are ahead of us on this through their e-billing systems. They're coming to us and telling what we can charge for a matter. I think we're all trying to catch up quite fast on how to get ourselves ahead of the game here."
The complete article is definitely worth a read..

Wednesday, May 6, 2015

Interesting InfoSec Updates: Breaches, Disclosure Duties, Ethics Opinions & More

Several interesting updates on all things law firm information security to share. First: "Cybercrime at Firms Triggers Ethical Duties" --
  • "Law firms of all sizes are falling prey to hackers and Internet scams. Now the New York City Bar Association has released an ethics opinion clarifying that lawyers must report hacking or other breaches of their computer systems."
  • "The opinion makes clear that lawyers don’t violate their ethical obligations by reporting cyberfraud to enforcement authorities. The opinion also emphasizes that law firms must tell clients if their interests might be at risk."
The Association of Certified E-Discovery Specialists (ACEDS) has some interesting commentary on the same topic: "Tension between client confidentiality, public disclosure stifling law firm cyber-breach reporting" --
  • "As cyberattacks on law firms increasingly take on an air of inevitability, though their accounts are largely anecdotal, new questions center on how to respond to breaches of sensitive materials and how to responsibly disclose these incidents without jeopardizing client relationships, and running afoul of professional codes."
  • "Citigroup, for example, recently told its employees in an internal report that law firms are vulnerable hacking targets because they are clearinghouses of high-value information and possess relatively weak security measures, according to The New York Times. The Citi memo also said that law firm security generally falls below the standards of other industries — and pointed to a reluctance by law firms to publicly disclose breaches and the absence of formal reporting requirements in the legal field as reasons for silence."
  • "Attorney Gary Kibel, a partner at Davis & Gilbert, poses a hypothetical scenario. 'What if you had a breach of a client’s files, and that breach involved personal information of the client’s customers? Now what if there’s a requirement that you have to go tell the customers your firm was in possession of the client’s files in the first place? I have no doubt that some law firm is going to be faced with this at some point,' Kibel told ACEDS. 'We’re all going to have to research this information carefully or make an appeal to the state bar associations,' he said. 'I suspect that compliance of the law is going to trump attorney-client privilege — and that the client is going to be very perturbed.'"
  • "Right now I think there are a lot of law firms that just are not aware of how serious the threat can be. It’s still the mentality of, 'This can’t happen to us'," said Dana Post, special counsel for e-discovery and data management at Freshfields Bruckhaus Deringer, at a recent ACEDS New York chapter panel discussion on cybersecurity. Client pressure may prove to be among the most powerful forces in prompting law firms to bolster their security practices. Prospective clients are starting to ask about information security when shopping for legal representation, Post explained. 'he smart clients already ask the questions,' she said. 'But more are coming.'
  • "The inherent tension between maintaining client confidentiality and disclosing breaches where client confidences are directly at issue shows no signs of easing. As lawmakers eye legislation that would impose reporting requirements on breach victims, that conflict may be coming to a head."
It's these trends and shifting requirements that inform calls like this recent piece from Ryan Schlunz, Chief Innovation Officer, Stoel Rives: "It’s Time To Get Serious About Law Firm Cybersecurity" --
  • "Imagine if there were only two types of law firms in the United States today: those who have experienced a data breach and those who don’t yet know they have experienced a data breach. This scenario is actually not far from reality, and for most AmLaw 200 firms it is likely already accurate. However, many law firms don’t yet appear to appreciate the scale of the threat."
  • "Patent and insider deal information are not the only types of information at risk of cyber-attack. Stolen healthcare data sells for as much as $10 per medical record on the black market, and has fast become more valuable than credit card information. Even those firms who do not store healthcare and financial data, or data related to mergers & acquisitions or patents, are at risk of hackers coming after client information that could help them hack into client systems It’s time for law firms to wake up and make cybersecurity a top priority at all firms."
  • "How law firms ensure the security of data is already a critical issue for all clients. Having data security procedures in place – such as regular client audits that prove that data is secured properly – is quickly becoming an industry standard. Regulatory requirements are likely not far behind. It’s time for all law firms to get serious about cybersecurity." 

Tuesday, May 5, 2015

Law Firm Disqualifications (Pursued or Achieved) Making News

First up, the case of the "Cat Came Back" -- "North Carolina Business Court: What Part Of Disqualification Do You Not Understand?" --
  • "The disqualified law firm had asked Judge Bledsoe to clarify his Order disqualifying it from representing the Plaintiff Kingsdown.  That was due to the firm's past representation of Defendant Hinshaw (the corporation's CEO) on a personal basis in the transactions which were the heart of the lawsuit."
  • "The law firm was not giving up its representation of its corporate client easily.  The Court's disqualification Order said that the law firm was disqualified from "further representation of Kingsdown in this matter against the Hinshaws."  Op. ¶56.  How far did the prohibition of that Order really go? The law firm argued that it should be allowed to continue in its role as Kingsdown's regular corporate counsel and to advise Kingsdown on the litigation against Hinshaw without appearing as counsel of record, so long as it did not disclose any of the confidential information it had obtained in the course of its representation of Mr. Hinshaw.
  • "Judge Bledsoe shot that argument down quickly.  He said: 'To the contrary, the Court intended that the Firm would cease all representation of Kingsdown adverse to the Hinshaws in this matter, whether as litigation counsel or otherwise. The Firm’s failure to satisfy Rule 10(b) of the Rules of Professional Conduct and the appearance of impropriety created by the Firm’s representation of Kingsdown do not disappear simply because the Firm is no longer counsel of record – as corporate counsel, the Firm is still representing a current client (Kingsdown) adverse to a former client (the Hinshaws) in a substantially related matter, and the ethical concerns attendant to that representation, including the appearance of impropriety, remain.'"
  • "So it looks like this entire lawsuit is radioactive to the law firm, despite the law firm's protestations that its client is being deprived of the counsel of its choice.  The Court responded to that point by saying that: 'the right of one to retain counsel of his choosing is secondary in importance to the Court’s duty to maintain the highest ethical standards of professional conduct to insure and preserve trust in the integrity of the bar. Avoiding a conflict and the appearance of impropriety are the best solutions.'"
"Affiliate Representation, Advance Waivers, Appearance of Impropriety, and Purloined Documents" --
  • "In short, the court determined that 'the facts weigh in favor of the conclusion that [subsidiary] and [parent] are a unified client. Hogan Lovells has advised [parent] on strategic decisions in matters that impact the entire corporate family, [parent] and [subsidiary] share the same legal department, and the company considers Hogan Lovells to be both its and its subsidiaries’ top strategic firm.' The court’s conclusion that the law firm represented both parent and subsidiary meant that the firm was engaged in a concurrent conflict of interest in the litigation at hand."
  • "The court stuck to this conclusion even over the parent’s signed representation agreement with the firm in 2005 stipulating to 'Client Identification' as follows: ‘You agree that the person or entity identified as engaging us in the Transmittal Letter is our client for the specific matters on which we are engaged, and that we shall not be deemed to represent any of its parents, subsidiaries, or other affiliates unless we expressly agree in writing to do so.'"
  • "The court disregarded this agreement because “the behavior of Hogan Lovells, [parent], and [subsidiary] since 2005 implies that all three understood Hogan Lovells was more than just [parent]’s law firm. Hogan Lovells’s relationship with [parent] may have started with the parent company alone, but its later representation of [subsidiary] and at least one other subsidiary . . . shows the expansion of their attorney-client relationship."
"Caesars Creditors Try to Disqualify Kirkland" --
  • "The committee has asked a judge to disqualify Kirkland, claiming the firm is conflicted because it has represented the casino company’s majority owners, Apollo Global Management LLC and TPG Capital, on unrelated matters. The committee is also claiming that the firm improperly received almost $10 million in fees on the eve of the company’s Jan. 15 bankruptcy."
  • "Bankruptcy is costly, and the spat over Kirkland is running up the bill. The firm said in court papers that it spent almost $10 million in the first six weeks since Caesars filed for bankruptcy. The disqualification fight will add to the cost without moving the case closer to a resolution."

Monday, May 4, 2015

Conflicts News: Laterals, Waivers (or Not)

Several Monday updates to share. First, Pinhawk’s Jeff Brandt highlighted this ABA article on the increasingly complex lateral risk landscape, noting that data about lateral-driven malpractice claims highlights "the importance of a *great* conflicts system" – "Malpractice concerns spark heightened scrutiny of lawyers switching firms" --
  • "As law firms have become more wary about ethics considerations in making lateral hires, experts say the process of switching legal employers has become more complex."
  • "A major cause for the increased focus on ethics when it comes to hiring laterals is that a significant percentage of malpractice claims against firms are related to newer hires. 'Our malpractice carrier tells us that a disproportionate number of claims that member law firms report come from lateral attorneys—attorneys with less than five years with the firm,' says Timothy W. Callahan II, general counsel at Saul Ewing in Philadelphia."
  • "'Every time a law firm hires a lateral, that lateral brings with him or her some potential conflicts that may either affect the firm's ability to continue to rep-resent current clients or prevent the firm from representing some potential clients,' says Peter A. Joy, who teaches professional responsibility at Washing-ton University School of Law in St. Louis and has consulted with several law firms about conflicts issues arising from laterals. 'Potential conflicts are the major reason why law firms are more ethics-wary in hiring laterals. No law firm wants to see itself disqualified from continuing to work on a case in which it has invested time and its client has invested a lot of fees. In some instances, the law firm may have to return some of the fees earned—or if it is a contingency fee case, the firm may lose out on a fee.'"
And several sources are covering the case of allegedly waived alleged waiver: "Drug Maker Mylan Sues Law Firm Kirkland & Ellis" --
  • "Mylan NV sued Kirkland & Ellis LLP over the law firm’s role advising Teva Pharmaceutical Industries Ltd. , which is in a bitter takeover battle with the drug maker. Mylan said in a complaint, filed in Pennsylvania state court late Friday, that because Kirkland has represented the company in the past, it should be barred from working for Teva, which last month launched a $40 billion public bid that Mylan has rejected."
  • "'We are confident in the propriety of our representation of Teva Pharmaceutical in this matter,' Kirkland said in a statement. 'We have a written conflicts-waiver letter, signed by Mylan, regarding the work we have done for Mylan. These filings are without merit, and are simply tactical measures designed to impede the proposed transaction.'"
  • "According to the lawsuit, Mylan has had a relationship with Kirkland since January 2013, and the law firm has had " wide-ranging access to Mylan's business," including confidential information about its drug pipeline, pricing strategy and prospects for regulatory approval. The information allegedly includes details about Mylan's EpiPen allergic-reaction treatment, which Teva is now targeting with a competing product. Such information is typically considered valuable for a company pressing a takeover bid, helping it determine, for example, how much to offer and whether regulators will sign off."
  • "Suing a former adviser in a takeover battle is a rare move. Airgas Inc. in 2010 sued Cravath, Swaine & Moore LLP for representing Air Products & Chemicals Inc., arguing that Cravath's previous relationship with Airgas should have prevented it from working on the potential deal. That case was eventually settled on confidential terms after Air Products abandoned its bid. Cravath is now advising Mylan."